PETALING JAYA: The mobile telecommunications (telecoms) sector is entering a more favourable earnings cycle, after operators adopted more disciplined pricing strategies in the first half of financial year 2026 (1H26), strengthening the outlook for revenue growth and improving the investment case for the sector, according to CIMB Research.
Maintaining its “overweight” rating, the research house said recent pricing actions indicate that operators are prioritising profitability over subscriber growth.
“The ongoing market repair improves the earnings outlook for mobile players for the next one to two years, though we recognise lingering near-term concerns over Digital Nasional Bhd (DNB),” it said in a report to clients yesterday.
CIMB Research said the industry has largely embraced a “more for more” strategy, with operators introducing plans that bundle larger data quotas or enhanced features alongside higher monthly fees.
The approach allows customers to receive greater value while enabling telcos to gradually lift average revenue per user (Arpu).
The changes were rolled out by CelcomDigi Bhd
, Maxis Bhd’s Hotlink brand and U Mobile Sdn Bhd through revised prepaid and postpaid offerings between January and June, with price increases generally ranging from 7% to 20%.
Rather than expecting an immediate financial boost, the research house believes the earnings impact will build progressively as subscribers migrate to the new plans.
“While the positive impact would not be fully felt immediately owing to the grandfather rule, for example, existing subscribers can choose to stay on their current plans, we think it may become visible from 2H26, and lead to gradually improving Arpu over the next two years when subscribers migrate to these new plans as data usage grows,” it said.
The research house has consequently become more constructive on Maxis and CelcomDigi, noting that both companies remain attractively valued despite recent share price performance.
For investors with a 12 to 18-month investment horizon, CIMB Research said the stocks are trading at meaningful discounts to their historical valuation averages while offering dividend yields of between 5% and 6%.
The research house also dismissed concerns that recent increases in data allowances without corresponding price hikes signal a return to aggressive competition.
“We view these moves more as adjustments to plans to align with peers’ offers, rather than a reversal into aggressive pricing strategies,” it said.
Instead, the changes appear designed to ensure operators remain competitive while preserving pricing discipline across the market.
Nevertheless, CIMB Research cautioned that significantly larger data allocations on some plans could reduce operators’ ability to generate further Arpu gains through similar pricing revisions.
“Telcos may need to find other ways beyond outright price increases to compel subscribers to spend more, for example through offering content or other value-added services,” it said.
Despite remaining positive on the sector, the research house warned that intensifying competition and adverse regulatory developments remain the principal risks to its outlook, while uncertainty surrounding potential losses related to DNB could continue to weigh on investor sentiment in the near term.
Meanwhile, another analyst from a foreign brokerage told StarBiz that Malaysia’s telecommunication company is becoming a “cash-flow and dividend” story rather than a growth story.
“Mobile penetration is already above 100%, smartphone adoption is mature, and organic subscriber growth is essentially exhausted.
“That means the biggest driver of shareholder returns is no longer adding customers, but extracting more value from the existing base while keeping capital expenditure under control,” he said.
The analyst commented that the encouraging development over the past year has been the apparent return of pricing discipline, and if operators can avoid another round of irrational price wars, low to mid single-digit service revenue growth can translate into much stronger earnings and free cash flow growth because the networks are already largely built.
Still, he added: “Where we are slightly more cautious than consensus is on the sustainability of that discipline.
“Malaysia has historically been one of the most competitive mobile markets in South-East Asia, and the biggest uncertainties are not demand – they are competitive and regulatory.”
He said questions remain over the long-term structure of the 5G market, future spectrum allocation, and whether smaller operators will eventually resort to aggressive promotions to gain market share.
“The next leg of growth has to come from enterprise services, artificial intelligence-enabled connectivity, cybersecurity, cloud, and fixed-mobile convergence rather than simply charging RM5 or RM10 more for another 100GB,” explained the analyst.
